QUOTE AND NEWS
Market Intelligence Center  Sep 18  Comment 
The patented algorithms that power MarketIntelligenceCenter.com's Artificial Intelligence Center found a trading opportunity with Newell Rubbermaid Inc. (NWL) that should provide a 3.79% return in just 183 days. Sell one Mar. '15 call at the...
newratings.com  Aug 14  Comment 
WASHINGTON (dpa-AFX) - Newell Rubbermaid (NWL) announced that its Executive Vice President or EVP and Chief Financial Officer or CFO, Doug Martin, has resigned from the company effective August 31, 2014. Doug Martin will be joining Spectrum...
SeekingAlpha  Aug 14  Comment 
By David Trainer: Check out this week's Danger Zone Interview with Chuck Jaffe of Money Life and MarketWatch.com. Newell Rubbermaid (NYSE:NWL) is in the Danger Zone this week. NWL's stock has doubled over the past two years as reported earnings...
Market Intelligence Center  Aug 13  Comment 
The patented option trade-picking algorithms behind MarketIntelligenceCenter.com's Artificial Intelligence Center have selected a covered call trade on Newell Rubbermaid Inc. (NWL) that includes 4.24% downside protection. Sell one contract of the...
SeekingAlpha  Jul 31  Comment 
Newell Rubbermaid (NYSE:NWL) Q2 2014 Earnings Call July 31, 2014 8:00 am ET Executives Nancy O'Donnell - Vice President of Investor Relations Michael B. Polk - Chief Executive Officer, President and Director Douglas L. Martin -...
TheStreet.com  Jul 31  Comment 
NEW YORK (TheStreet) -- Shares of Newell Rubbermaid Inc. are higher by 2.50% to $32.40 on heavy volume in early afternoon trading on Thursday, after the company reported that its net income for the 2014 second quarter was $150.6 million, or 54...
newratings.com  Jul 31  Comment 
WASHINGTON (dpa-AFX) - Newell Rubbermaid (NWL) reported that its second-quarter net income increased to $150.6 million, from $109.8 million, prior year. Reported earnings per share were $0.54 compared to $0.37, prior year. The company said the...
Wall Street Journal  Jul 31  Comment 
Newell Rubbermaid said its second-quarter profit jumped 37%, driven by stronger sales in its tools and commercial-products segments.
Forbes  Jul 30  Comment 
Optimism surrounds Newell Rubbermaid, as it gets ready to report its second quarter results on Thursday, July 31, 2014. Analysts are expecting the company to book a profit of 54 cents a share, up from 50 cents a year ago.The consensus estimate is...
Forbes  Jul 25  Comment 
The latest tally of analyst opinions from the major brokerage houses shows that among the components of the S&P 500 index, Newell Rubbermaid (NWL) is now the #25 analyst pick, moving up by 2 spots.         This rank is formed by averaging...




 

Newell Rubbermaid Inc. (NYSE: NWL) makes consumer goods in over 20 brands, including: Rubbermaid Sharpie, Calphalon, and Graco. Newell Rubbermaid's products include plastic bins, cookware, writing instruments, power tools, and baby strollers. Around 90% of households in the United States own at least one Newell Rubbermaid product.[1] Newell Rubbermaid products are mostly branded, semi-durable, and discretionary, so demand fluctuates with economic conditions.

Since 2004, Newell Rubbermaid has completed 15 strategic acquisitions and divestitures[2] and outsourced 75% of production to China.[3] However, macroeconomic conditions like slowing U.S. consumer spending and a 22% increase in the cost of resin[4] have driven up costs and decreased potential revenue. Rising costs are linked to a larger trend of raw material inflation, especially of oil, the basic raw material used to make plastic. Also, Newell Rubbermaid changes its prices only twice per year, and most of its pricing decisions reflect the demands of its large retail customers, like Wal-Mart (WMT).[5]

Company Overview

Rubbermaid is the maker of families of leading brand names and profitable and innovative products, including Rubbermaid, Paper Mate, Parker, Waterman, and Calphalon, among others. The company markets its multi-product offering through high-volume retailers, including discount, drug, grocery and variety chains; warehouse clubs; department, hardware and specialty stores; home centers; office superstores; and contract stationers. The Company’s largest customer, Wal-Mart (which includes Sam’s Club), accounted for approximately 12% of net sales in 2009.[6] The Company’s top ten customers in 2009 included Bed Bath & Beyond, Lowe’s, Office Depot, OfficeMax, Staples, Target, The Home Depot, Toys ‘R’ Us, and W.W. Grainger.

Business and Financial Metrics

First Quarter 2010 Results[7]

Rubbermaid reported net income of $58.4 million, or $0.19 per diluted share. This compares to $33.7 million, or $0.12 per diluted share, in the first quarter 2009. Net sales increased 8.5 percent to $1.3 billion in the first quarter, compared to $1.2 billion in the prior year. Core sales improved 7.2 percent. The company estimates that 2 to 3 percent of the core sales increase reflects increased consumer demand while the remainder is attributable to selective customer inventory restocking and a timing shift in customer buying patterns from the second quarter to the first quarter. Foreign currency translation contributed 2.5 percent to the company’s net sales improvement, while the year over year impact of last year’s product line exits reduced net sales by 1.2 percent. Gross margin for the quarter was 36.1 percent, up 100 basis points from last year as productivity gains and improved product mix more than offset the impact of inflation during the quarter.

Business Segments

Home & Family (42.6% of 2009 sales)[6]

Rubbermaid's Home & Family segement manufactures infant and juvenile products such as car seats, strollers, highchairs, and playards; gourmet cookware, bakeware, cutlery and small kitchen electrics; hair care accessories; cabinet hardware, drapery hardware and window treatments; and indoor/outdoor organization, food storage, and home storage products. This segment's brands include:

  • Rubbermaid
  • Graco
  • Aprica
  • Levolor
  • Cephalon
  • Goody

Office Products (30% of 2009 sales)[6]

The Office Products segment manufactures writing instruments, including markers, highlighters, pens, pencils, and fine writing instruments; office technology solutions such as label makers and printers, interactive teaching solutions, card-scanning solutions, and on-line postage; and art products. Key brands include:

  • Sharpie
  • Paper Mate
  • Dymo
  • Parker
  • Waterman

Tools, Hardware & Commercial Products (27.4% of 2009 sales)[6]

The Tools, Hardware & Commercial Products segment manufactures hand tools, power tool accessories, industrial bandsaw blades, propane torches, and manual paint applicators; window hardware; cleaning and refuse products, hygiene systems and material handling solutions. Key brands include:

  • Lenox
  • Irwin
  • Rubbermaid Commercial Products
  • Technical Concepts

Trends and Forces

The rising cost of resin

As oil costs rise, Newell Rubbermaid is impacted on two fronts: production and distribution.[8] Simultaneously, the rising cost of oil drives up transportation costs, functionally undermining the benefit of outsourced manufacturing. Since Asia provides around 75% of Newell Rubbermaid's goods, but less then 4% of revenue, the company has no choice but to transport goods over long distances from manufacturing centers to markets. Moreover, because Newell Rubbermaid only revises product prices every six months (January and July), any unanticipated input cost inflation cuts into the company's gross margin until the company's next opportunity to raise prices.[9]

Newell Rubbermaid's reliance on a few major, high-volume customers limits its ability to raise prices to match costs.

Newell Rubbermaid's top 10 customers include “big box” commercial retailers like Wal-Mart, Target, Office Depot, and Home Depot.[10] Wal-Mart, Newell Rubbermaid’s largest customer, has accounts for 12-13% of total sales.[11] The consolidation of the retail industry into a few major stores has given retailers a bargaining advantage, encouraging price competition between suppliers and making it harder for Newell Rubbermaid to maintain its profit margins.[12] For instance, when resin costs tripled between 1994 and 1996, Rubbermaid’s attempt to raise prices to maintain its gross margin caused Wal-Mart, its largest customer, to backlash and replace Rubbermaid products with those of a competitor. Rubbermaid lost millions and was driven into a merger with Newell by 1999.[13] Moreover, when faced with low discretionary spending, large retailers promote their own private label goods to compete directly with Newell Rubbermaid's branded products.[14]

Newell Rubbermaid’s revenue fluctuates with the economy, since it relies on discretionary consumer spending.

In economic downturns, consumers either delay the purchase of discretionary goods or opt for cheaper alternatives, like private label products. Most Rubbermaid products are discretionary items, and sales of Rubbermaid's products decline sharply during recessions.

Competition

Cleaning, Organization, and Décor

  • Tupperware (TUP) offers resin-based food storage bins that rival Rubbermaid kitchen storage products. However, the company earns 77% of its Tupperware revenue from outside North America.[15] Tupperware also employs direct selling methods that avoid large retailers. [16]
  • Jarden (JAH), another consumer goods conglomerate, sells food storage products under the brand-name FoodSaver.

Tools and Hardware

  • Fortune Brands (FO), a conglomerate with hardware, spirits, and golf segments, competes with Newell Rubbermaid's Allison cabinet hardware. Fortune Brands is the exclusive cabinet supplier for Home Depot (HD) and Lowe's Companies (LOW).
  • Black & Decker (BDK), a major supplier of power tools in the United States, competes with Newell Rubbermaid's Lenox and Irwin brands. Black and Decker has been adversely impacted by the U.S. Housing slowdown, while Newell Rubbermaid has been able to compensate for decreasing growth in Tools and Hardware with its other business segments.

Home and Family

  • Lifetime Brands (LCUT) offers consumer products, especially for domestic kitchens, through a set of 35 brands. Lifetime Brands competes with Newell Rubbermaid's culinary products, particularly its Calphalon and Kitchen Essentials product lines.

References

  1. Dave Casey, Director Global Transportation at NWL, Presentation at Georgia Foreign Trade Conference, 1/14/2008
  2. Newell Rubbermaid Press Releases
  3. NWL Q1 Earnings Call 4/24/2008 (transcript)
  4. NWL Q1 Earnings Call 4/24/2008 (transcript)
  5. NWL Q1 Earnings Call 4/24/2008 (transcript)
  6. 6.0 6.1 6.2 6.3 Newell Rubbermaid 10-K 2009
  7. CDTV: "Earnings Review: Newell Rubbermaid (NYSE: NWL) Reports First Quarter 2010 Results"
  8. OPEC Reference Prices
  9. NWL Q1 Earnings Call 4/24/2008 (transcript)
  10. NWL 2007 10-K page 9
  11. NWL 2007 10-K page 4
  12. NWL 2007 10-K page 9
  13. New York Times, "As Biggest Business, Wal-Mart Propels Changes Elsewhere," 10/12/2000
  14. NWL 2007 10-K page 9
  15. TUP 2007 10-K page 23
  16. TUP 2007 10-K page 5
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki